International Journal of Public Administration

ISSN: 0190-0692 (Print) 1532-4265 (Online) Journal homepage: http://www.tandfonline.com/loi/lpad20

E-Government and Corruption: A Longitudinal

Analysis of Countries

Xuejiao Zhao & Hua Daniel Xu

To cite this article: Xuejiao Zhao & Hua Daniel Xu (2015) E-Government and Corruption:
A Longitudinal Analysis of Countries, International Journal of Public Administration, 38:6,
410-421, DOI: 10.1080/01900692.2014.942736

To link to this article: http://dx.doi.org/10.1080/01900692.2014.942736

Published online: 16 Apr 2015.

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 International Journal of Public Administration, 38: 410–421, 2015
Copyright © Taylor & Francis Group, LLC
ISSN: 0190-0692 print / 1532-4265 online
DOI: 10.1080/01900692.2014.942736

E-Government and Corruption: A Longitudinal Analysis of Countries

Xuejiao Zhao
Department of Political Science, Auburn University, Auburn, Alabama, USA
School of Public Policy and Management, Tsinghua University, Beijing, China

Hua Daniel Xu
Department of Political Science and Public Administration, Auburn University
at Montgomery, Montgomery, Alabama, USA
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Corruption remains a common governance concern for most countries, and the deployment
of information technology in the public sector can potentially increase the transparency of
government. This article reviews the past research on e-government and corruption at country
level, develops a comprehensive model, and utilizes a most recent longitudinal dataset from 80
countries for five selected years (2003–2010). Our panel data analysis suggests that the devel-
opment of e-government is correlated with lower levels of perceived corruption. In addition,
the perceived level of corruption is also related to several other factors including government
effectiveness, gender ratio, and government size.

Keywords: e-government, corruption, comparative study, government transparency, public

policy, public administration

INTRODUCTION
Corruption is one of the greatest challenges in the contempo-
rary world. According to the Corruption Perceptions Index
2013, which scores 177 countries and territories on a scale
from 0 (highly corrupt) to 100 (very clean), no country has
a perfect score, and two-thirds of countries score below 50
(Transparency International, 2013). This indicates a seri-
ous, worldwide corruption problem. Commonly defined as
“the (mis)use of public office for private gain” (Bardhan,
1997, p. 1321; Svensson, 2005, p. 20; Treisman, 2000, p.
399), corruption retards economic development. Nye (1967)
identified several costs of corruption: waste of resources,
instability, and reduction of governmental capacity. He also
stated that:
it is probable that the costs of corruption in less developed
countries will exceed its benefits except for top level corrup-
tion involving modern inducements and marginal deviations
Correspondence should be addressed to Dr. Hua Daniel Xu, Auburn
University at Montgomery, Department of Political Science and Public
Administration, P.O. Box 244023, Goodwyn Hall, Montgomery, AL 36124,
USA. E-mail: xudaniel@gmail.com
and except for situations where corruption provides the only
solution to an important obstacle to development. (1967,
p. 427)
Klitgaard (1988) contended that corruption reallocates
resources to the rich and powerful at the expense of the poor,
the rural, and the disadvantaged. Rose-Ackerman (1999)
argued that corruption impedes investment and growth, and
developing countries are particularly at risk. Building on data
for up to 70 countries for the period 1980–1983, Mauro
(1995) showed that subjective indexes of corruption devel-
oped from Business International indices are negatively
linked with investment and economic growth.
e-Government is widely believed to reduce corruption and
enhance transparency (Anderson, 2007; Cho & Choi, 2004;
DiRienzo, Das, Cort, & Burbridge, 2007; Kim, Kim, & Lee,
2009; Kumar & Best, 2006; Pathak & Prasad, 2006; Shim
& Eom, 2008; Tolbert & Mossberger, 2006). According
to the United Nations Division for Public Economics and
Public Administration (UNPA) and the American Society
for Public Administration (ASPA), e-government is defined
as “utilizing the Internet and the world-wide-web for deliv-
ering government information and services to citizens”
(2002, p. 1). The potential benefits of e-government are

manifold: improved transparency, account-ability, and access
and increased trust in government. Moreover, it promotes
democratization by increasing the public’s involvement in
the political process and increase the transparency of the
administrative process (Xu, 2012).
Despite an extensive body of studies on the anticorrup-
tion effect of e-government, most of them are case studies.
Although progress has been made to understand the relation-
ship between e-government and corruption, most of these
studies are descriptive and theoretical and therefore lack
external validity. Utilizing Hausman–Taylor estimator, one
technique of panel data analysis, this article attempts to
add to the current literature on corruption by constructing
a larger and newer panel dataset and testing the relationship
between perceived corruption and e-government readiness.
This study also explores other determinants of corruption,
such as the level of development, growth rate, government
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size, political system, voice and accountability, political sta-
bility, government effectiveness, regulatory quality, rule of
law, level of urbanization, female leader ratio, population,
education, and religion. Based on a panel data of 80 countries
for the years 2003, 2004, 2005, 2008, and 2010, we found
that there is a positive and significant relationship between
e-government and the Corruption Perceptions Index.
The remainder of this article is organized as follows.
The first part provides a concise review of recent research
focused on the anticorruption effect of e-government. In the
second part, we will outline the research methods and data
sources. Finally, we will present the results of our research
and compare them with previous studies.
LITERATURE REVIEW
Theoretical Background: Principal–Agent Theory
Principal–agent theory is one of the most important theories
shedding lights on the relationship between e-government
and corruption (Norris & Moon, 2005). Agency theory
is able to help explore how information technology can
“change the principal–agent relationship and improve the
quality of management and control” (Norris & Moon, 2005,
p. 66). In the principal–agent relationship, the principal “con-
siders entering into a contractual agreement with another,
or the agent, in the expectation that the agent will subse-
quently choose actions that produce outcomes desired by the
principal” (Moe, 1984, p. 756). While the principal usually
has authority or responsibility, the agent possesses knowl-
edge and expertise. However, the interests of the principal
and the agent are not always the same. According to Moe,
“the agent has his own interests at heart, and is induced
to pursue the principal’s objectives only to the extent that
the incentive structure imposed in their contract renders
such behavior advantageous.” (1984, p. 756). Moreover, the
information about the agent’s actions and performance is
E-GOVERNMENT AND CORRUPTION 411
“not only imperfect but skewed in favor of the agent” (Moe,
1984, p. 756). This information asymmetry can result in
adverse selection, moral hazard, and corruption. Therefore,
the principal needs to control the agent and narrow the
information gap.
e-Government can alleviate agency problem: it helps
monitor public employees’ performance and also provides
citizens with the access to the communications with govern-
ment agencies. With rules and procedures being standard-
ized, e-government minimizes the discretion and opportuni-
ties for arbitrary action (Bhatnagar, 2003). It also “increases
chances of exposure by maintaining detailed data on trans-
actions, making it possible to track and link the corrupt
with their wrongful acts. By making rules simpler and
more transparent, e-government enables citizens and busi-
nesses to question unreasonable procedures” (Bhatnagar,
2003, p. 30). Tolbert and Mossberger (2006) further contends
that e-government helps increase citizen trust in govern-
ment through two approaches: the entrepreneurial approach
and the participatory approach. The entrepreneurial approach
stems from the new public management reforms: reinvent
government into an institution that is customer driven, ser-
vice oriented, effective, and efficient (Chadwick & May,
2003; Osborne & Gaebler, 1992). E-government provides
a flexible and convenient way for government customers,
who can access government anytime and experience “one-
stop shopping” for information and services (Tolbert &
Mossberger, 2006, p. 357). The other approach, the par-
ticipatory approach, regards information technology as the
most important tool for establishing a more participatory
democracy and enhancing trust in government. The post-
ing of legislation, agendas, policies, and contact information
makes government more transparent, and citizens become
more knowledgeable about government and political issues.
Moreover, with the emergence of new social networking
technologies, e-government may “aid in the process of
democratization and may even catalyze the democratizing
process, as seen in some Middle Eastern countries” (Xu,
2012, p. 915).
Overall, e-government is recognized as “a tool to reinvent
the public sector by transforming internal government work
processes and external relationships with citizens” (Shim
& Eom, 2008, p. 299). That is, internally, e-government
can reduce arbitrary human intervention and monitor pub-
lic employees’ behavior. Externally, e-government can foster
relationships with citizens and increase the transparency of
the administrative process (Shim & Eom, 2008).
Prior Research on e-Government and Corruption
There is a growing body of studies on the relationship
between e-government and corruption (Anderson, 2007; Cho
& Choi, 2004; DiRienzo et al., 2007; Kim et al., 2009;
Kumar & Best, 2006; Pathak & Prasad, 2006; Shim &
Eom, 2008; Tolbert & Mossberger, 2006). Most of them
 412 ZHAO AND XU

are case studies, or other types of qualitative studies. These
case studies, however, provide compelling evidence that
e-government plays a vital role in reducing corruption.
There are several case studies worthy discussion. Cho and
Choi (2004) conducted a case study of the “OPEN” sys-
tem (Online Procedures ENhancement for civil application)
adopted by the Seoul Metropolitan Government (SMG) as
a reform measure to combat corruption. The OPEN system
is a web-based Internet service to transact civil applica-
tions for permits, registrations, procurements, contracts, and
approvals. The online transaction of civil application cases
eliminates the necessity for personal or telephone contact
between the applicants and the city officials handling the
applications and thus reduces the opportunities for compro-
mising deals between the two parties. Both the citizens who
used the system and the city officials who were involved
in managing the system tended to have favorable opinions
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not only lead to savings in time, cost, and effort, but also
have the potential for reducing opportunities for corrup-
tion. Unfortunately, the program was not able to continue
after over 1 year of successful operation. Kumar and Best
suggested that
the main opposition to the delivery of e-government services
through the kiosks came from some taluk and village level
officials, who perceived a threat to their role, authority, and
influence in the community if they lost their traditional con-
tact with the villagers applying for these services. (2006,
p. 10)
With e-government services, the kiosk operator assumed the
role of a facilitator, reducing the intermediate channels of
communication in the government hierarchy (village admin-
istrative officer, revenue inspector, and Taluk office), thus

decreasing delays and rent-seeking opportunities (Kumar &

on its corruption control effect as attested by the survey
Best, 2006).
findings. Based on institutional theories, Kim et al. (2009)
While these case studies have greatly contributed to our
examined the development, implementation, and evolution
understanding of the relationship between e-government and
of the OPEN system. The reason why they chose a single
corruption, it is necessary to take note of their shortcomings.
case study is that the OPEN case is “unique” (as it is one of
Due to their research design, the external validity of these
a few e-government systems for anticorruption) and serves
case studies is questionable. Each e-government project is
“a revelatory purpose” (Kim et al., 2009, p. 44). In addi-
viewed as distinct or unique, so it is difficult to know if
tion, the method of case study allows researchers to explore
there is a true linkage between e-government and corrup-
the relationship among multiple stakeholders involved in the
tion. There are also a few empirical studies exploring the
e-government projects. Kim et al. (2009) also found that e-
linkage between e-government and corruption. Based on
government exerts a tangible influence on corruption. When
the Corruption Perceptions Index and the Digital Access
the OPEN system was introduced in 1999, the anticorruption
Index1 for up to 85 countries, DiRienzo et al. (2007) found
index of the SMG was 64.0. It increased to 84.9 in 2006, indi-
that greater access to information significantly lowers cor-
cating a steady improvement in transparency. Although the
ruption levels across nations. Also using the Corruption
SMG has executed other anticorruption strategies, the OPEN
Perceptions Index, Shim and Eom (2008) concluded that
system was voted as the Most Valuable Policy of Seoul in
e-government, measured as West’s e-government scores2
1999 and 2000. The OPEN system was also recognized by
and the United Nations’ e-participation index,3 has a con-
the United Nations in 2000 and promoted to other countries.
sistently positive impact on reducing corruption. Building
Analyzing nine e-government projects in India, Pathak
on the World Bank’s Control of Corruption Index4 rather
and Prasad (2006) demonstrated that e-governance can
than the Corruption Perceptions Index, Andersen (2009)
be very effective in reducing corruption or eliminating
provided new empirical evidence that increases in the use
it altogether. The projects they studied include Bhoomi,
of e-government have led to a reduction in corruption
Computer-aided Administration of Registration Department
over the decade 1996–2006 in non-OECD countries. Most
(CARD), Computerized Interstate Checkpoints in Gujarat,
of these empirical studies have very limited observations
Saukaryam (“comfort or facility” in the Telugu language),
Customs online, Vijayawada Online Information Center,
Karnataka Valuation and E-Registration, Central Vigilance 1 Published by the International Telecommunication Union in 2003, the
Commission Web Site, and eSeva. These projects have made Digital Access Index (DAI) measures the overall ability of individuals in a
information about the functioning of government and its offi- country to access and use new ICTs. The DAI is built around four funda-
cials available to the citizens around the clock or on demand mental vectors that impact a country’s ability to access ICTs: infrastructure,
affordability, knowledge and quality, and actual usage of ICTs. http://www.
and thereby increased transparency.
itu.int/ITU-D/ict/dai/.
Kumar and Best (2006) studied the Sustainable Access 2 Developed by a research team headed by Darrell M. West of Brown
in Rural India project in Tamil Nadu, India, which provided University, this data consist of an assessment of over 2000 national gov-
comprehensive information and communications services in ernment web sites for 2001–2008. http://www.insidepolitics.org/egovtdata.
rural communities through computer and Internet kiosks. html.
3 United Nation Global E-government Survey 2003. http://unpan1.un.
Using local government taluk office records, government
org/intradoc/groups/public/documents/un/unpan016066.pdf.
census records, and surveys of the village kiosk opera- 4 Governance Matters VI: Governance Indicators for 1996–2006. http://
tors, Kumar and Best (2006) found that Internet kiosks www.worldbank.org/wbi/governance/wp-governance.html.

(around 100 observations). Although these studies used
cross-country data, few of them are longitudinal studies.
Take the study of Shim and Eom (2008) for instance, they
used cross-country data from 127 countries, but their study
is only based on 1 year’s data.
Research Questions and Hypotheses
Before the advent of e-government, researchers have sug-
gested a multiplicity of other factors influencing the level
of corruption. These factors are categorized into four groups
in the following discussion: economic factors, political and
governmental factors, demographic factors, and cultural fac-
tors. These points will also be used as building blocks in
establishing a comprehensive model of corruption in this
study.
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Economic factors
Various authors have suggested that the level of economic
development, mostly indicated by per capita gross domes-
tic product (GDP), exerts an influence on corruption (Chang
& Golden, 2007; Elbahnasawy & Revier, 2012; Fisman &
Gatti, 2002; Serra, 2006; Swamy, Knack, Lee, & Azfar,
2001; Treisman, 2000). A richer country usually will be able
to devote more resources to the prevention and detection
of corruption (Elbahnasawy & Revier, 2012). However, in
poor countries, economic difficulties often lead to a blur-
ring effect between law-abiding and criminal behavior (Park,
2003). Moreover, a country with higher income growth rate
is more likely to engender a higher level of corruption. The
argument is that there are generally more opportunities for
corruption when a country is in the stage of rapid economic
development.
Political and governmental factors
It is argued that political regime is a critical factor of the
level of corruption (Lederman, Loayza, & Soares, 2005;
Treisman, 2000). Lacking mechanisms of political account-
ability and transparent flow of information, authoritarian
countries are on average more corrupt than regimes where
political leaders are democratically elected. The risk of
exposure is also higher in more democratic, open political
systems. Freedom of association and freedom of the press
enable the public and reporters with a mission and the right
to expose abuses (Brunetti & Weder, 2003). Greater civic
engagement may result in closer monitoring and reduced
corruption (Treisman, 2000). However, some scholars also
questioned the role of democracy in controlling corruption.
Based on a comparative study between China and India, Sun
and Johnston contended that “democracy by itself does not
lead to significantly less, or more, corruption” (2009, p. 2).
India, a poor democratic state, seems to do neither strikingly
better nor worse in terms of corruption than China, an author-
itarian developmental sate (Sun & Johnston, 2009). Instead
E-GOVERNMENT AND CORRUPTION 413
of political regime, Sun and Johnston (2009) suggested that
the corruption-checking benefits of democracy depend criti-
cally upon economic development. Besides political regime,
government size also influences corruption level. It seems
likely that rent-seeking opportunities will be more abundant
the greater the size of the public sector (Fisman & Gatti,
2002). If a significant proportion of goods and services are
purchased by government, there will be many more govern-
ment contracts for which bribes might be offered. Political
stability may be another factor of the prevalence of cor-
ruption. However, the direction of the effect of political
stability on corruption is uncertain (Treisman, 2000). While
the extended tenure arising from political stability may pro-
vide public officials more time to build long-term relation-
ships with potential suppliers of bribes, political instability
may put high pressure on people to do anything possible in
order to protect their social status and property—including
corrupt behaviors (Brunetti & Weder, 2003; Elbahnasawy
& Revier, 2012; Park, 2003). The quality of government
regulation also affects corruption level. When too many regu-
lations and rules recurrently hamper free economic activities,
this spawns rent-seeking behavior and increases the level of
corruption (Bardhan, 1997; Park, 2003). Many researchers
suggested a significant association between the rule of law
and the level of corruption (Damania, Fredriksson, & Mani,
2004; Park, 2003). Meanwhile, strong rule of law reduces
the chance of corruption to take place. Enhancing the overall
government effectiveness can also be an anticorruption strat-
egy. A government that is effective, efficient, and transparent
will leave no loopholes for corruption.
Demographic factors
Swamy et al. (2001) investigated the relationship between
gender and corruption. Their micro-data from the World
Values Surveys and an enterprise survey in Georgia showed
that women are less involved in bribery and are less likely
to condone bribe-taking. In addition, their cross-country data
also showed that corruption is less severe where women hold
a larger share of parliamentary seats and senior positions in
the government bureaucracy, or they comprise a larger share
of the labor force (Swamy et al., 2001).
The level of urbanization impacts the prevalence of cor-
ruption. An urban population is likely to be more knowledge-
able and informed about political affairs and the operation of
the government bureaucracy and more critical of question-
able behavior by public officials. Therefore, the greater the
percentage of the population that is urban, the less likely
it is that corrupt acts will occur (Elbahnasawy & Revier,
2012).
Higher level of education will also increase the likelihood
that an act of corruption will be discovered and punished.
Regressing the corruption level of the 1990s on the variable
of education (measured ad secondary school enrollment rate
in 1975), Ali and Isse (2003) found a negative and significant
 414 ZHAO AND XU
relationship between education and the level of corruption.
Education not only fosters a sense of nationalism, but also
raises the public’s awareness of their rights to the services of
the bureaucrats (Ali & Isse, 2003). Thus, the higher the level
of education, the lower the level of corruption in a country.
Cultural factors
Another common explanation of differential corruption is
that culture is very different in countries (Bardhan, 1997;
Brunetti & Weder, 2003; Park, 2003). What is regarded
in one culture as corrupt may be considered as a part of
routine transaction in another (Bardhan, 1997). One of the
most cited cultural factors is religion (Chang & Golden,
2007; Herzfeld & Weiss, 2003; La Porta, Lopez-de-Silanes,
Shleifer, & Vishny, 1999; Paldam, 2001; Persson, Tabellini,
& Trebbi, 2003; Treisman, 2000). Culture is “a nebulous
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concept defying quantification, but reasonably good statis-
tics exist for the cross-country pattern of religion, which may
be seen as (one of) the pillar(s) of culture” (Paldam, 2001,
p. 383). The existence of religion data might be one of the
reasons why religion is always regarded as a proxy for cul-
ture. Many researchers reported that countries with a higher
proportion of Protestants tend to have lower corruption level
(Chang & Golden, 2007; La Porta et al., 1999; Paldam, 2001;
Treisman, 2000).
DATA AND METHODS
Exploring the link between e-government and corruption is
the major focus of this study. Based on the literature review
and the availability of data, a model of corruption is devel-
oped, including e-government readiness, income, growth
rate, government size, regime type, voice and accountabil-
ity, political stability, government effectiveness, rule of law,
female ratio, level of urbanization, education, and religion.
The dependent variable is level of corruption, which is mea-
sured as the Corruption Perceptions Index developed by
Transparency International. Transparency International is a
global civil society organization leading the fight against cor-
ruption. Combining surveys and assessments of corruption
from a variety of reputable institutions, the index measures
the perceived levels of public-sector corruption in countries
worldwide. The reason why the index is based on perceptions
is that there is no meaningful way to assess absolute levels of
corruption in countries or territories. Collecting reliable data
on corruption through traditional survey techniques is prob-
lematic because corruption is illegal, and respondents may
choose to misreport or not report at all for various reasons
(Seligson, 2002). After all, the Corruption Perceptions Index
is the most widely used measure of corruption (DiRienzo
et al., 2007; Elbahnasawy & Revier, 2012; Husted, 1999;
Seligson, 2002; Shim & Eom, 2008). One thing that needs
additional attention is that the Corruption Perceptions Index
ranges from 0 to 10, where a 10 signifies an entirely clean
country while 0 equals a country where business transactions
are entirely dominated by kickbacks, extortion, etc.
This study adds to the current literature by utilizing
a newer and larger panel data of 80 countries for the
years 2003, 2004, 2005, 2008, and 2010. Combining the
time series of cross-section observations, panel data give
“more informative data, more variability, less collinearity
among variables, more degrees of freedom and more effi-
ciency” (Badi.H. Baltagi, 1995, pp. 3–6). Panel data also
allow controlling for individual unobserved heterogeneity.
Since unobserved heterogeneity is the main problem of non-
experimental research, this advantage is especially useful.
Moreover, “by studying the repeated cross section of obser-
vations, panel data are better suited to study the dynamics
of change” (Gujarati 2003, p. 638). So, panel data anal-
ysis can not only enhance the quality and quantity of
data, but also can track the changes in corruption levels
in different countries over time. First, a fixed-effect model
(Model 1, without considering e-government) is employed.
Then, a random-effect model (Model 2, without consider-
ing e-government) is employed. While the fixed-effect model
assumes that the unobserved heterogeneity is correlated with
the explanatory variables, the random-effect model does not.
In order to demonstrate the effect of e-government on cor-
ruption, a fixed-effect model (Model 3) and a random-effect
model (Model 4) are employed again, taking e-government
into account this time. The Hausman test is employed
to choose between the random-effect and the fixed-effect
model. It turned out that the fixed-effect model is pre-
ferred. However, the fixed-effect estimator does not allow
estimating coefficients of time-invariant variables (Badi.H.
Baltagi, 1995; Hsiao, 2003), such as religion. Following
Elbahnasawy and Revier (2012), the Hausman–Taylor esti-
mator (Model 5) is employed. The Hausman–Taylor estima-
tion is not an “all or nothing choice of correlation between
the individual effects and the regressors” (Badi H. Baltagi,
Bresson, & Pirotte, 2003, p. 361). In this approach, some
regressors are regarded as correlated with the unobserved
country-specific effects and hence endogenous, while oth-
ers are independent of the random individual effects and
therefore exogenous (Elbahnasawy & Revier, 2012). It com-
bines the advantages of both fixed-effect and random-effect
model. The equations for the five models are specified as
follows:
CORRPit = β0 + β1 RGDPit + β2 GDPGRit + β3 REGTYit
+ β4 GOVSit + β5 VOICEit + β6 POLISTit
+ β7 GOVEFit + β8 REGUit + β9 LAWit
+ β10 FEit + β11 FELit + β12 URBit + β13 EDUit
+ β14 POPit + β15 RELIi + ai + uit (1)
 E-GOVERNMENT AND CORRUPTION 415

LAWit : Rule of law

CORRPit = β0 + β1 RGDPit + β2 GDPGRit + β3 REGTYit FEit : Female ratio
FELit : Female leader ratio
+ β4 GOVSit + β5 VOICEit + β6 POLISTit URBit : The percentage of urban population in total
population
+ β7 GOVEFit + β8 REGUit + β9 LAWit EDUit : The level of education
POPit : Population density
+ β10 FEit + β11 FELit + β12 URBit + β13 EDUit
RELIi : Religion
+ β14 POPit + β15 RELIi + vit (2) EGOVit : E-government readiness
ai : Unobserved heterogeneity/effect
uit : Idiosyncratic error/time-varying error
CORRPit = β0 + β1 RGDPit + β2 GDPGRit + β3 REGTYit vit : Composite error term

+ β4 GOVSit + β5 VOICEit + β6 POLISTit

The basic dataset primarily draws from the World Bank’s
+ β7 GOVEFit + β8 REGUit + β9 LAWit World Development Indicators (WDI), including per capita
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GDP, growth rate, government size, level of urbanization,

+ β10 FEit + β11 FELit + β12 URBit + β13 EDUit
female ratio, education, and population density. WDI is
+ β14 POPit + β15 RELIi + β16 EGOVit + ai + uit a reliable secondary data source. By compiling officially
recognized international sources, WDI presents the most cur-
(3) rent, high-quality, internationally comparable global devel-
opment data available. The data for e-government are from
the United Nations E-Government Development Database.
CORRPit = β0 + β1 RGDPit + β2 GDPGRit + β3 REGTYit
It provides a comparative assessment of a state’s use of
+ β4 GOVSit + β5 VOICEit + β6 POLISTit Internet for provision of information, products and ser-
vices, plus the level of telecommunication and human cap-
+ β7 GOVEFit + β8 REGUit + β9 LAWit ital infrastructure development in a country. It also ranks
the 191 member states of the United Nations in terms of
+ β10 FEit + β11 FELit + β12 URBit + β13 EDUit e-government development from 2003 to 2012. The primary
source of data for the E-Government Development Database
+ β14 POPit + β15 RELIi + β16 EGOVit + vit comes from the United Nations Global E-Readiness Reports
(4) and Survey. For the measure of political system, data are
extracted from the Polity IV Project, a dataset that pro-
vides annual time-series data in country-year format cover-
CORRPit = β0 + β1 RGDPit + β2 GDPGRit + β3 REGTYit ing all major, independent states from 1800 to 2010. It is
the most widely used data resource for studying regime
+ β4 GOVSit + β5 REGUit + β6 URBit + β7 FELit
change and the effects of regime authority. In this study,
+ β8 POPit + β9 EDUit + ζ1 VOICEit we use the combined polity2 index ranging from −10 to
10 (−10 = hereditary monarchy; 10 = consolidated democ-
+ ζ2 POLISTit + ζ3 GOVEFit + ζ4 LAWit racy). In order to assess the influence of governance on
corruption, Worldwide Governance Indicators (WGIs) will
+ ζ5 FEit + ζ6 EGOVit + αRELIi + vit be used. The WGI project reports aggregate and individ-
(5) ual governance indicators for 215 economies over the period
of 1996–2011, for six dimensions of governance: voice and
where accountability, political stability and absence of violence,
government effectiveness, regulatory quality, rule of law, and
CORRPit : The level of corruption control of corruption. In this study, five of the governance
RGDPit : Real GDP per capita (constant 2000 US$) indicators will be used except for control of corruption.
GDPGRit : GDP growth rate (annual %) Moreover, the Global Religious Landscape Report provided
REGTYit : Regime type detailed information on the size and distribution of major
GOVSit : Government size religious groups all over the world, which can be utilized
VOICEit : Voice and accountability to operationalize the variable of religion. Table 1 describes
POLISTit : Political stability and absence of violence variables’ definitions, indicators, and sources.
GOVEFit : Government effectiveness Based on the availability of data, 80 countries are selected
REGUit : Regulatory quality (see Table 2), including 26 high-income countries, 24 upper
 416 ZHAO AND XU

TABLE 1
Variables

Variables Labels Indicators Sources

Country corruption level CORRP Corruption Perceptions Index (from 0 to 10). A score of 10 equals an Transparency International
entirely clean country while 0 equals a country where business
transactions are entirely dominated by kickbacks, extortion, etc.
Real GDP per capita RGDP Real GDP per capita (constant 2000 US$). GDP per capita is gross World Bank World Development
domestic product divided by midyear population. GDP is the sum Indicator (WDI)
of gross value added by all resident producers in the economy
plus any product taxes and minus any subsidies not included in the
value of the products. It is calculated without making deductions
for depreciation of fabricated assets or for depletion and
degradation of natural resources. Data are in constant US dollars.
GDP growth rate GDPGR Annual percentage growth rate of GDP at market prices based on World Bank World Development
constant local currency. Aggregates are based on constant Indicator (WDI)
2000 US dollars.
Regime type REGTY POLITY2 is a modified version of the POLITY variable added in Polity IV Project
order to facilitate the use of the POLITY regime measure in
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time-series analyses. It modifies the combined annual POLITY

score by applying a simple treatment to convert instances of
“standardized authority scores” (i.e., −66, −77, and −88) to
conventional polity scores (i.e., within the range, −10 to +10).
The POLITY score is computed by subtracting the AUTOC score
from the DEMOC score; the resulting unified polity scale ranges
from +10 (strongly democratic) to −10 (strongly autocratic).
Government size GOVS General government final consumption expenditure (% of GDP). World Bank World Development
General government final consumption expenditure includes all Indicator (WDI)
government current expenditures for purchases of goods and
services (including compensation of employees). It also includes
most expenditures on national defense and security, but excludes
government military expenditures that are part of government
capital formation.
Political stability and POLIST Reflects perceptions of the likelihood that the government will be Worldwide Governance Indicators
absence of violence destabilized or overthrown by unconstitutional or violent means,
including politically motivated violence and terrorism. It ranges
from approximately −2.5 (weak) to 2.5 (strong).
Government effectiveness GOVEF Reflects perceptions of the quality of public services, the quality of Worldwide Governance Indicators
the civil service and the degree of its independence from political
pressures, the quality of policy formulation and implementation,
and the credibility of the government’s commitment to such
policies. It ranges from approximately −2.5 (weak) to 2.5
(strong).
Regulatory quality REGU Reflects perceptions of the ability of the government to formulate Worldwide Governance Indicators
and implement sound policies and regulations that permit and
promote private-sector development. It ranges from approximately
−2.5 (weak) to 2.5 (strong).
Rule of law LAW Reflects perceptions of the extent to which agents have confidence in Worldwide Governance Indicators
and abide by the rules of society, and in particular the quality of
contract enforcement, property rights, the police, and the courts,
as well as the likelihood of crime and violence. It ranges from
approximately −2.5 (weak) to 2.5 (strong).
The urbanization level URB The percentage of urban population in total population. Urban World Bank World Development
population refers to people living in urban areas as defined by Indicator (WDI)
national statistical offices. It is calculated using World Bank
population estimates and urban ratios from the United Nations
World Urbanization Prospects.
Female ratio FE The percentage of the population that is female. Population is based World Bank World Development
on the de facto definition of population. Indicator (WDI)
Female leader ratio FEL Proportion of seats held by women in national parliaments (%). World Bank World Development
Women in parliaments are the percentage of parliamentary seats Indicator (WDI)
in a single or lower chamber held by women.
Population density POP Population density (people per sq. km of land area). World Bank World Development
Indicator (WDI)

(Continued)
 E-GOVERNMENT AND CORRUPTION 417
TABLE 1
(Continued)

Variables Labels Indicators Sources

Education outcomes
Religion
The level of e-government
EDU School enrollment, secondary (% gross). World Bank World Development
Indicator (WDI)
RELI The percentage of population that is religiously unaffiliated as of PEW research center (The Global
2010. Religious Landscape Report)
EGOV E-government index. E-government is defined as the use of ICT and United Nations E-Government
its application by the government for the provision of information Development Database
and public services to the people. The aim of e-government
therefore is to provide efficient government management of
information to the citizen; better service delivery to citizens; and
empowerment of the people through access to information and
participation in public policy decision-making.

Sources: Polity IV Project (http://www.systemicpeace.org/polity/polity4.htm); The PEW Forum on Religion and Public Life (http://www.pewforum.
org/global-religious-landscape.aspx)l; Transparency International (http://www.transparency.org/research/cpi/); United Nations E-Government Development
Database (http://unpan3.un.org/egovkb/datacenter/CountryView.aspx); World Bank World Development Indicator (http://data.worldbank.org/indicator);
Worldwide Governance Indicators (http://data.worldbank.org/data-catalog/worldwide-governance-indicators).
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TABLE 2
List of Countries in the Sample

High income Upper middle income Lower middle income Low income
(≥$12,476) ($4,036–$12,475) ($1,026–$4,035) (≥$1,025)

Countries Cyprus Algeria Albania Bangladesh

Kuwait Botswana Bolivia Congo, Dem. Rep.
Saudi Arabia Brazil Congo, Rep. Kenya
Austria Bulgaria El Salvador Madagascar
Belgium Chile Georgia Malawi
Canada China Ghana Mauritania
Denmark Colombia Guatemala Mozambique
Finland Costa Rica Guyana Nepal
France Dominican Republic Honduras Rwanda
Germany Ecuador India
Greece Jordan Indonesia
Hungary Latvia Lesotho
Ireland Malaysia Morocco
Israel Mauritius Nicaragua
Italy Mexico Pakistan
Japan Namibia Paraguay
Korea, Rep. Panama Philippines
The Netherlands Peru Senegal
New Zealand South Africa Sri Lanka
Norway Thailand Sudan
Portugal Tunisia Swaziland
Spain Turkey
Sweden Uruguay
Switzerland Venezuela, RB
United Kingdom
United States
Total 26 24 21 9

middle-income countries, 21 lower middle-income coun- countries generally have better resources and infrastructure
tries, and 9 low-income countries.5 A higher proportion of for assembling and publishing national data.
high-income countries are included mainly because these

5 According to the World Bank, countries are categorized by income

more. Economies are divided according to 2011 GNI per capita, calcu-
into four groups: low income, $1025 or less; lower middle income, $1026– lated using the World Bank Atlas method (http://data.worldbank.org/about/
$4035; upper middle income, $4036–$12,475; and high income, $12,476 or country-classifications).
 418 ZHAO AND XU

RESULTS AND DISCUSSIONS
Tables 3 and 4 present the summary statistics and a corre-
lation matrix of the variables. Table 5 presents the results
of the estimation. Columns (1) and (2) show the results of
the fixed-effect model and the random-effect model with-
out taking the effect of e-government into account. Columns
(3) and (4) demonstrate the results of the same fixed-effect
model and the random-effect model with the variable of
e-government. In either case, the R2 of the random-effect
model is higher than that of the fixed-effect model due to
the dummy variables for country and years. However, in
Model 3 (Column 3), the coefficient of e-government has
the expected positive sign and is significant at conventional
significant levels, indicating that there is a positive relation-
ship between e-government and the Corruption Perceptions
Index. Which model should we choose? To decide between
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the fixed- and random-effect models, we ran a Hausman test
where the null hypothesis is that the preferred model is the
random-effect model. It basically tests whether the individ-
ual country-specific effects are correlated with the regres-
sors. The null hypothesis assumes they are not. The value of
the Hausman test’s Chi-squared statistic was 53.39, reject-
ing the null hypothesis even at the 1% significance level.
As a result, the Hausman test suggests choosing the fixed-
effect model. However, the fixed-effect models were unable
to estimate the coefficients of time-invariant variables: reli-
gion (see Columns (1) and (3)). Therefore, we resort to the
Hausman–Taylor model where “some of the regressors are
correlated with the individual effects” (emphasis in original;
Badi H. Baltagi et al., 2003, p. 361). However, it is difficult
to identify which of the regressors should be viewed as corre-
lated with the unobserved country-specific effects and which
should be considered exogenous. Following Elbahnasawy

TABLE 3
Summary Statistics

Variable Obs. Mean Standard deviation Minimum Maximum

Corruption perception index 387 4.654 2.277 1.300 9.700

Real GDP per capita 400 9083.527 11,364.280 85.293 41,399.710
GDP growth rate 397 4.355 3.019 −7.755 18.287
Government size 396 16.227 6.022 5.282 43.850
Regime type 400 6.005 5.423 −10.000 10.000
Voice and accountability 400 0.223 0.928 −1.740 1.830
Political stability 400 −0.133 0.946 −2.730 1.670
Government effectiveness 400 0.302 0.977 −1.720 2.340
Regulatory quality 400 0.306 0.886 −1.620 1.920
Rule of law 400 0.187 1.002 −1.730 1.990
Level of urbanization 400 59.738 21.548 14.840 98.400
Female ratio 400 50.231 1.630 39.995 54.081
Female leader ratio 398 18.220 11.120 0.000 56.300
Population density 400 130.313 168.069 2.440 1140.000
Education 348 80.505 27.626 10.821 162.349
Religion 400 9.409 12.986 0.000 57.000
E-government 400 0.499 0.194 0.000 0.927

TABLE 4
Correlation Matrix of the Variables
CORRP RGDP GDPGR GOVS REGTY VOICE POLIST GOVEF REGU LAW URB FE FEL POP EDU RELI EGOV

CORRP 1.000
RGDP 0.859 1.000
GDPGR −0.404 −0.413 1.000
GOVS 0.547 0.468 −0.327 1.000
REGTY 0.429 0.379 −0.311 0.113 1.000
VOICE 0.826 0.733 −0.420 0.417 0.783 1.000
POLIST 0.773 0.618 −0.325 0.469 0.420 0.768 1.000
GOVEF 0.948 0.838 −0.402 0.541 0.485 0.857 0.761 1.000
REGU 0.916 0.799 −0.415 0.515 0.539 0.878 0.775 0.952 1.000
LAW 0.946 0.831 −0.384 0.553 0.454 0.855 0.808 0.964 0.942 1.000
URB 0.595 0.557 −0.214 0.291 0.258 0.506 0.396 0.569 0.589 0.517 1.000
FE 0.190 0.086 −0.341 0.122 0.507 0.386 0.231 0.229 0.249 0.169 −0.010 1.000
FEL 0.499 0.397 −0.237 0.349 0.286 0.464 0.430 0.455 0.410 0.414 0.199 0.263 1.000
POP −0.014 0.064 −0.010 −0.136 0.060 0.054 −0.082 0.054 −0.003 0.062 −0.165 −0.045 −0.069 1.000
EDU 0.739 0.679 −0.365 0.472 0.432 0.713 0.572 0.774 0.793 0.733 0.734 0.114 0.289 −0.017 1.000
RELI 0.423 0.394 −0.217 0.317 0.196 0.385 0.443 0.439 0.431 0.421 0.274 0.269 0.321 0.141 0.391 1.000
EGOV 0.848 0.837 −0.423 0.454 0.524 0.802 0.609 0.873 0.871 0.829 0.701 0.255 0.400 0.027 0.831 0.462 1.000
 E-GOVERNMENT AND CORRUPTION 419
TABLE 5
Estimation Results

(1) (2) (3) (4) (5)

Fixed Random Fixed Random Hausman–Taylor
Variables effects effects effects effects estimator

Real GDP per capita .00003 .00004∗∗∗ .00002 .00003∗∗∗ .00003

(.0000) (.0000) (.0000) (.0000) (.0000)
GDP growth rate −.00486 −.00200 −.00503 −.00238 −.00182
(.0077) (.0078) (.0077) (.0077) (.0070)
Government size .03479∗∗ .01509 .03661∗∗ .01667 .03767∗∗∗
(.0121) (.0092) (.0121) (.0092) (.0111)
Regime type −.01407 −.02592 −.01086 −.02472 −.02047
(.0166) (.0140) (.0166) (.0140) (.0148)
Voice and accountability .48952∗∗ .20605 .44585∗ .18968 .32755∗
(.1828) (.1465) (.1831) (.1467) (.1576)
Political stability −.10153 −.04740 −.10021 −.03282 −.09910
(.1004) (.0819) (.0998) (.0824) (.0893)
Government effectiveness .53838∗∗∗ .67958∗∗∗ .57749∗∗∗ .68937∗∗∗ .62019∗∗∗
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(.1625) (.1459) (.1627) (.1456) (.1461)

Regulatory quality .20202 .19451 .18252 .16538 .21510
(.1750) (.1525) (.1742) (.1533) (.1584)
Rule of law .32246 .66860∗∗∗ .27177 .64349∗∗∗ .33670
(.2117) (.1673) (.2120) (.1675) (.1843)
Level of urbanization .03698 .00775 .03339 .00619 .00729
(.0216) (.0044) (.0216) (.0045) (.0138)
Female ratio .83260∗∗∗ .06853 .73482∗∗∗ .05373 .33520∗
(.2052) (.0470) (.2099) (.0481) (.1385)
Female leader ratio −.00283 .01251∗∗ −.00454 .01162∗ −.00243
(.0077) (.0049) (.0077) (.0049) (.0066)
Population density −.00024 −.00051 −.00004 −.00053 −.00025
(.0034) (.0004) (.0034) (.0004) (.0018)
Education .00354 .0009 .00272 −.00004 .00449
(.0039) (.0029) (.0039) (.0029) (.0035)
Religion — −.0002 — −.00081 −.00649
(.0057) (.0057) (.0136)
E-government 1.02802∗ .78246 1.1765∗
(.5226) (.4796) (.4754)

R2 0.7261 0.9332 .7343 .9319

Number of observations 333 333 333 333 333
Number of countries 80 80 80 80 80
∗ 5% significance level, ∗∗ 1% significance level, ∗∗∗ 0.1% significance level.

and Revier (2012), we checked the statistical significance
of the difference between the fixed-effect and random-effect
coefficients for every explanatory variables, which is avail-
able in the results of the Hausman test. If the difference is
significant, then that variable will be regarded as endogenous
in the Hausman–Taylor procedure. In our study, time-varying
explanatory variables treated as endogenous are per capita
GDP, growth rate, government size, regime type, regulatory
quality, level of urbanization, female leader ratio, popula-
tion density, and education. And time-varying explanatory
variables treated as exogenous are voice and accountabil-
ity, political stability, government effectiveness, rule of law,
female ratio, and e-government.
Surprisingly, according to the results of the Hausman–
Taylor estimation, the economic factors (real GDP per capita
and income growth rate) are not significant. However, real
GDP per capita is positive and significant at the 0.1% level
in the random-effect models (Model 2 and Model 4).
Among political and governmental factors, the coeffi-
cients of government size, voice and accountability, and
government effectiveness are significant. The coefficient of
voice and accountability is .3276, indicating that the higher
the level of perceived freedoms of expression and the press,
the lower the level of perceived corruption in a country.
This is consistent with the findings of Brunetti and Weder
(2003). As to government effectiveness, it reduces perceived
corruption significantly. Holding everything else constant,
one standard deviation increase in perceived government
effectiveness reduces the index of perceived corruption by
.62. Moreover, the coefficients of government effectiveness
are consistently positive and significant at the 0.1% signifi-
cance level in all the five models. So its effect on perceived
 420 ZHAO AND XU
corruption is extremely strong. Unexpectedly, there is a posi-
tive and significant relationship between government size and
perceived corruption, which means that the large size of gov-
ernment is correlated with less corruption. The sign is not
what we have hypothesized. The creation of a large govern-
ment is essential to meet the needs of public service and does
not necessarily lead to more corruption. Regarding the rule
of law, it is statistically significant at the 0.1% significance
level in Model 2 and Model 4, but it turned insignificant
in the Hausman and Taylor model. The political system
does not seem to influence perceived corruption. The coef-
ficient of political system is statistically insignificant in all
the five specifications, though the sign is what is expected.
Other political and governmental factors, political stability,
and regulatory quality do not have a statistically significant
impact on corruption, either.
Female ratio, one of the demographic factors, has a
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positive and significant relationship with corruption. The
coefficient of female ratio is .33520, suggesting that each
standard deviation increase in the proportion of women in
the population reduces perceived corruption by .3352 of a
point. This is largely consistent with what Swamy et al.
(2001) found: women are less involved in bribery. However,
the female leader ratio, indicated as the proportion of seats
held by women in national parliaments, is insignificant in the
Hausman–Taylor estimation. Similarly, there is no signifi-
cant relationship between level of urbanization and perceived
level of corruption. Its coefficient is insignificant in all the
five models. Moreover, the coefficients of education and
religion are also not statistically significant.
Finally, there is a positive and significant relationship
between e-government and corruption, which is where our
primary interest lies in. The higher the level of e-government
readiness, the less corrupt the government in a country. As to
the magnitude of the impact of e-government on corruption,
a one standard deviation increase in e-government readiness
decreases corruption by 1.1765. It affirms the result of the
study of Shim and Eom (2008): e-government is a critical
factor in determining corruption.
CONCLUSION
Utilizing panel data analysis, this article attempts to add to
the current literature on political corruption by constructing
a larger and newer panel dataset and testing the relationship
between perceived government corruption and e-government
readiness. In addition, this study also explores other determi-
nants of corruption, such as national income, growth rate,
government size, political system, voice and accountabil-
ity, political stability, government effectiveness, regulatory
quality, rule of law, level of urbanization, female ratio,
female leader ratio, population density, education, and reli-
gion. In order to include this comprehensive list of corruption
determinants, following Elbahnasawy and Revier (2012),
we utilized the Hausman–Taylor estimator which is able to
regress on both time-varying and time-invariant variables.
The estimation result confirmed our central hypothesis: there
is a positive and statistically significant relationship between
e-government readiness and the Corruption Perceptions
Index. That is, the higher the level of e-government readi-
ness, the higher the level of cleanness and transparency in
a country. Besides e-government readiness, other significant
determinants of corruption in this study include government
size, voice and accountability, government effectiveness, and
female ratio. Further studies are needed to explore the prac-
tical steps to fight against corruption. Another limitation of
our research is the sample selection. Having a more repre-
sentative sample that mirrors the composition of the world
can increase the inferential power of the study for more less
developed countries.
The results of our research also suggest that the pro-
motion of e-government through policy initiatives can be
effective in reducing corruption. It will be more effective
when combined with measures to enhance government effec-
tiveness and rule of law. Nevertheless, the efforts in investing
e-government ultimately depend on the willingness of a
government to increase transparency.
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